Waiting lists back up as new car sales speed ahead

There is no better economic indicator than new car sales, the motor industry never tires of saying.

There is no better economic indicator than new car sales, the motor industry never tires of saying.

But if sales growth continues at the present rate - averaging 20 per cent a year since 1994 - that maxim may have to be rewritten because the economy will cease to be able to keep up.

Even in these abnormal times, the performance of the sector stands out. New car sales are expected to top the 150,000 mark by the end of the year, setting a record for the fifth year running and defying the predictions of 12 months ago.

"All the pundits, all the manufacturers, all the distributors got it completely wrong," says Mr Eddie Nolan, chairman and managing director of Ford Ireland. "We all thought that with the end of the scrappage scheme the market would be the same as last year less the scrappage. But things have just kept on going."

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The biggest increase has been in the sales of some luxury models with Mercedes up by 58 per cent and Saab up by more than 40 per cent. However, increases are spread across the board with Nissan, Toyota and Renault already topping their 1997 sales totals with four months of the year to go.

The driving force, according to Mr Cyril McHugh, chief executive of the Society of the Irish Motor Industry, is not economic growth but job creation.

"There is a lot of confidence around, especially compared to the early 1990s. People are getting into a secure frame of mind in regard to their jobs: that even if they have to change jobs they can do so with relative ease. Combined with that there is a huge increase in the number of people at work who need transport to go to work."

Other factors include low levels of inflation, low interest rates and the availability of a greater variety of financing options. However, he says, the boom in sales should be viewed in the context of a natural growth in car ownership here.

With an estimated 350 cars per 1,000 people, Ireland is still catching up on the OECD average of 450 cars per 1,000 population.

A recent Automobile Association survey of 16 European cities showed that Dublin, with 331,000 private cars, had the second lowest people-to-car ratio of 3.18. Lisbon, with almost the same population, had twice the number of cars while London had 2.55 people per car and Rome 1.55 people per car.

From the car-buyers point of view, the sales boom has also presented some difficulties, most notably, increased delays for the delivery of new vehicles. These range from about one year for Mercedes SLK and CLK models to at least two months for a Volkswagen Golf or Passat.

"If you'd said we'd have these delays four or five years ago you'd have been laughed at," says Mr Faughnan. "You might have an eight-month waiting period for the latest Ferrari but for your bog-standard car it's unheard of."

He says traders under-ordered by about 10 per cent on average at the beginning of the year, predicting a fall off in demand with the end of the scrappage scheme.

For some models, delays have fallen in recent months. However, it is too late for many buyers who are now opting to wait for a 1999 registration.

In the second-hand market, sales are equally strong with more than twice as many transactions as in the new market. However, secondhand imports from Britain have been badly hit by the strengthening of sterling.

"Importing from England is dying," says Mr Alan Costello, an importer of second-hand Japanese cars and a founder-member of the Irish Motor Dealers' Association. "Sterling is too dear. But the yen is cheap. It means we are now importing cars from Japan and exporting them to England and the North."

According to association figures, the number of British-imported cars sold here on the second-hand market fell from 42,000 in 1995 to 30,000 last year with just 21,000 sold by August 31st, 1998. In contrast, second-hand Japanese imports sold here rose from 6,000 in 1995 to 15,500 last year with 14,000 registered up to the end of August.

The export to Britain of second-hand Japanese imports, meanwhile, has increased to an estimated 10,000 this year, a five-fold rise since 1995.

To Mr McHugh, this increase in secondhand imports is a threat to both Government Revenue and new car sales.

However, the Department of Environment's compulsory vehicle safety test, scheduled for introduction early in the year, will provide an incentive for owners to trade in cars older than four years. And this, coupled with falling interest rates and an ever-expanding economy, should guarantee further growth in new sales.

"Next year will see another 150,000 sales at least," says Mr Nolan of Ford Ireland. "This train isn't going to stop for a long time yet."

Joe Humphreys

Joe Humphreys

Joe Humphreys is an Assistant News Editor at The Irish Times and writer of the Unthinkable philosophy column